The banking royal commission has provided renewed interest in the broker market and represents a “great opportunity” for brokers to outline exactly what they do, a leading broker has said.
Speaking on the Smart Property Investment Show – the podcast of The Adviser’s sister title, Smart Property Investment – the director and broker at Atelier Wealth, Aaron Christie-David, said that while the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry had surprised many in its recommendations, it was providing the broking industry with the opportunity to clarify what brokers do for borrowers.
The Sydney-based broker elaborated: “Like every mortgage broker, I probably got a bit blindsided by the results of it and the recommendations. But the sky isn’t falling on our heads as a mortgage broker. In fact, it has probably opened up a lot more opportunities and a lot more conversations off the royal commission to [ask]: ‘Actually how does a mortgage broker get paid? What is our role in the market? And how do we take conflict away from it?’.
“So, I think what it has really done is open up a lot of conversations about 1) our industry, 2) about how we get paid, and 3) who do we work for and what are the best outcomes? Because the whole industry is built on trying to get customers a home loan and make it as easy as possible. So, if we go back to that really core principle about what our role is, that’s what it is.”
Noting that mortgage broking has made the headlines and front pages in terms of their remuneration structures and what the different political parties are intending to do on broker remuneration, Mr Christie-David said it has been a “great opportunity” to get the right messages heard and demonstrate to Australian consumers what brokers do.
Mr Christie-David said: “It’s the underdog story. It’s the big banks versus mortgage brokers, a bit of David and Goliath. We love to see fairness and equality in the market, and handing power back to the big banks was never meant to be the outcome of this royal commission.
“So, I think that is what is coming out in the wash. Going back to what we’re doing for the commission and [the fact that] Australian consumers should be in a better position, not a worse position, off the back of this as well.”
The Atelier Wealth director added that trail commission was key to helping brokers provide long-term strategies for investors.
He said: “If I’m an investor and I say I want to buy my next two properties, we have to go back and map that out – so do servicing, do requirements, do lender options and come back to you with absolute confidence, because now we are going to send you out into the market with a certain borrowing capacity and engage a buyers agent, usually, as well... we need to have that foresight. That takes time out of our business.
“As a broker, I spend probably about three or four hours [doing that] and my team needs to do that as well, to do servicing, to do checks, to make sure those numbers are right if we’re going to brief a buyers agent. So, understand the role of your broker and understand what they do behind the scenes... we’ve got to do the servicing calculators, we’ve got to check policy, we’ve got to check what is going to happen if they (the lenders) change their policies in the next few months, if rates start to increase, etc.”
The broker went on to emphasise that non-bank lenders were providing some “strong competition” off the back of the royal commission and as the traditional lenders reduce their risk appetites and focus on more “simplified” offerings.
He said: “What we’ve found is non-bank lenders/challenger banks – because they don’t sit under the same APRA restrictions [as banks] – they have really put their hands up as challenger lenders and try to help and extend a welcome arm to investors.
“Because the big banks have shut up shop a little bit, because they have become more restrictive around lending during this royal commission (and I can’t see them easing up either), we’re seeing some really strong competition from the non-bank lenders, who are almost specialising in that investor space.”
Find out more about what the non-bank lenders are offering the market and brokers off the back of the royal commission in The Adviser’s Leadership Series webcast The Changing Lending Landscape at 3pm on Thursday (21 March).
Join The Adviser and a panel of leading non-bank representatives for a live, free webcast as we reveal how the lending landscape is changing, why the non-banks are taking an increased proportion of market share, and how they are delivering an individual approach to credit assessments.
Don’t miss your chance to find out:
Register now to ensure you don’t miss the webcast on Thursday.
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